Crypto Traders Balance Risk and Safety as ETF and Derivatives Volumes Soar

A growing number of investors in the United States are turning to cryptocurrency-based financial products to navigate heightened market uncertainty brought on by shifting trade policies. Recent data shows a surge in demand for both leveraged exchange-traded funds (ETFs) and crypto derivatives, as US President Donald Trump’s tariff plans inject new volatility into global markets. While some traders are seeking amplified exposure to risk assets like Bitcoin, others are hedging defensively with gold and cash. Traders Bet Both Ways as Volatility Reigns: Record Flows to Leveraged Long and Safe-Haven ETFs in 2025 Traders are simultaneously chasing high-risk rewards and sheltering in low-risk sanctuaries—often within the same trading day. According to newly released data from Bloomberg Intelligence, exchange-traded funds (ETFs) at both extremes of the risk spectrum are seeing record-breaking inflows, suggesting a bifurcated strategy among investors navigating what may be one of the most unpredictable markets in modern history. So far this year, ETFs that offer leveraged long exposure—typically amplifying the daily returns of volatile assets like tech stocks and cryptocurrencies—have attracted around $6 billion in net inflows. At the same time, cash and gold ETFs have collectively drawn approximately $4 billion, signaling a defensive posture among a significant segment of the investor base. “There’s basically record flows going into leveraged long ETFs but also cash and gold ETFs as people buy the dip and hedge the dip at the same time,” noted Bloomberg Intelligence senior ETF analyst Eric Balchunas in an April 23 post on X. “May the best degen win!” This strange duality reflects a market deeply divided—where some investors are betting on sharp rebounds while others brace for further corrections. Leveraged ETFs, often branded with 2x or 3x multipliers, are inherently speculative and popular among day traders and hedge funds. On the opposite end, gold and cash funds are traditionally seen as safe havens during periods of market stress. Tariff Shockwaves and the Resilience of Bitcoin The market’s fragility was starkly exposed earlier this month when President Donald Trump shocked global trade partners by announcing sweeping tariffs on US imports on April 2. The S&P 500, which had shown signs of stabilization earlier in the year, swiftly dropped nearly 5% in the wake of the announcement, according to Google Finance. But while equities stumbled, Bitcoin demonstrated an uncharacteristic calm. As of April 23, Bitcoin was trading above $93,000, recovering the psychological $90,000 threshold for the first time in six weeks. April 22 alone saw nearly $1 billion in net inflows into US-listed spot Bitcoin ETFs, highlighting strong institutional interest even amid macroeconomic jitters. ”Even in the wake of recent tariff announcements, BTC has shown some signs of resilience, holding steady or rebounding on days when traditional risk assets faltered,” noted a Binance research report published this week. The report also addressed the long-standing debate over whether Bitcoin can fulfill its moniker as ”digital gold.” Despite the narrative, Bitcoin’s correlation with gold remains weak, averaging just 0.12 over the past 90 days, compared to 0.32 with equities, suggesting that the asset behaves more like a tech stock than a safe-haven commodity. The Big Picture: Hedging Uncertainty with Extremes The growing divergence in ETF flows suggests more than just indecision—it reflects a market environment where investors no longer feel comfortable picking a single direction. Instead, they’re building portfolios for all possible outcomes: a tech-fueled bull run, a prolonged economic slowdown, or both. This hedging-on-steroids approach may be the only rational response in a world where central banks, geopolitics, and meme-driven momentum each hold sway over asset prices. Whether Bitcoin becomes the new gold or remains an ultra-volatile tech proxy, and whether tariffs crush growth or spark inflationary rallies, traders appear intent on capturing whichever scenario plays out first. US Crypto Exchanges Race for Derivatives Dominance as Trump’s Tariffs Spark Trading Surge In other news, United States-based cryptocurrency exchanges are doubling down on crypto derivatives. Exchanges like Coinbase, Robinhood, Kraken, and the Chicago Mercantile Exchange (CME) Group are aggressively expanding their derivatives offerings and exploring strategic acquisitions to seize control of what is rapidly becoming one of the most lucrative corners of the digital asset market. The push comes as investors seek tools to hedge against escalating macroeconomic uncertainty, fueled by Trump’s aggressive protectionist policies and a looming global trade war. The result has been a surge in demand for crypto futures and other derivatives, which are being increasingly used by both institutional investors and sophisticated retail traders. The market dynamic shifted dramatically in early April, when Trump unveiled his latest tariff plan, rattling traditional financial markets and amplifying interest in decentralized, hedge-capable assets like Bitcoin. In response, crypto derivatives platforms saw a spike in both trading volume and open interest. As of April 23, net open interest in Bitcoin futures surged approximately 30% month-to-date, hitting fresh year-to-date highs, according to data from Coinalyze. Net open interest in Bitcoin futures rose sharply in April (Source: Coinalyze ) Trump’s Election Victory Sparked the Fuse The derivatives boom can be traced back to late 2024, shortly after Trump secured his second term in office. Markets quickly began pricing in a more isolationist trade stance, and cryptocurrency exchanges saw record engagement. Coinbase reported in December that activity on its derivatives platform rose over 10,000% year-over-year. At the same time, the CME Group highlighted crypto derivatives as one of its fastest-growing product categories during its 2024 earnings call. But it was the April 2 tariff announcement that added fuel to the fire. Traders scrambled for exposure and protection, sending crypto derivatives volumes into overdrive. Futures, which are standardized contracts to buy or sell assets at a future date—often using leverage—became the go-to financial tool for navigating this new economic terrain. The intense demand has set off a race among US exchanges to outdo one another, with product innovation and acquisitions forming the key strategies. In February, Robinhood listed Bitcoin futures—its first foray into crypto derivatives. The following month, Coinbase launched several new contracts, including futures for Solana (SOL) and XRP, responding to rising interest in altcoin-based derivatives. Not to be outdone, CME Group also jumped into the altcoin game with its own Solana futures, which recorded $12 billion in volume on their first trading day, according to the exchange. Beyond product rollouts, consolidation is becoming a dominant theme. In March, Kraken acquired NinjaTrader, a legacy futures exchange, for $1.5 billion, significantly expanding its reach in derivatives. Meanwhile, Coinbase is reportedly in advanced talks to acquire Deribit, a top global crypto derivatives exchange, in a multibillion-dollar deal aimed at solidifying its foothold in the space. Strategic Importance in a Fragmenting Global Market “The recent wave of tariffs has transformed crypto derivatives exchanges into critical market infrastructure,” said Nic Roberts-Huntley, CEO of Web3 development firm Blueprint Finance. “While traditional markets faltered under tariff pressures, derivatives platforms have inversely flourished, serving both as speculative venues and protective hedging mechanisms in a fragmenting global trade landscape.” This shift marks a significant evolution in the role of crypto markets. Once considered the wild west of finance, derivatives exchanges are now being seen as key financial institutions—essential for managing risk in a macro environment increasingly defined by geopolitical friction and inflationary threats. The current moment also reflects a rare alignment of factors that favor crypto’s ascent: regulatory tailwinds, institutional interest, macro-driven demand, and the increasing sophistication of exchange infrastructure. As the US barrels further into an era of economic nationalism, crypto derivatives are emerging as one of the most effective tools for navigating policy shocks. US exchanges are racing not only to meet the moment but to shape it—by positioning themselves as indispensable to a global financial system in transition. Whether through organic growth, strategic acquisitions, or product expansion, platforms like Coinbase, Kraken, and CME are setting the tone for what could be a multi-trillion-dollar derivatives market.

Source: Coinpaper